USD/JPY steadfast around 114.00 level, US inflation worry investors

USD/JPY is appending yesterday rally led by US inflation to trade around 114.00 during early Asian hours on Friday. The cross on Thursday spiked on the back of US Treasury yields now turning cautious after annual consumer inflation in the US accelerated to a three-decade high of 6.2% in October. The outcome is raising expectations of earlier interest rate hikes by the Federal Reserve. The monetary policy views boosted the US Treasury yields to the highest rise in seven weeks, which propelled the US Dollar Index (DXY).

Previously, the wholesale inflation in Japan hit a four-decade high in October due to rising commodity prices and supply bottlenecks, as per government data. However, Bank of Japan (BoJ) policymakers iterated, acknowledging inflationary pressures arising from higher energy prices. They believe that it was moderate and that monetary easing should be maintained, according to BOJ October policy meeting minutes.

Meanwhile, besides Japan’s stimulus package news worth more than 30 trillion yen ($265 billion), China’s embattled Evergrande is in the headlines of late. It has once again met a deadline to pay overdue interest on three US dollar bonds before their grace periods ended. The Evergrande shares surged in Hong Kong on Thursday. Amidst undecided Fed Policymakers, coupled with the mild risk-on mood in a comparatively quiet market, USD/JPY seems to have buoyed. USD/JPY may continue to find impetus from a US rate hike hints and developing news from the China property sector.

USD/JPY technical levels

After capturing three-week-old resistance around 114.00, the USD/JPY daily chart now indicates that 114.70 (one-month high) can be re-tested. The following psychological barrier to the upside is at 115.00.

The price can reverse, wherein that the support level of 111.11, 100-day Simple Moving Average (SMA) will be first, followed by 110.82 (one-month low).